Group Audits in Practice: Roles, Instruction Flow, Failure Points, and How to Execute Well under the Revised Standards
Group audits, especially under ISA/HKSA 600 (Revised), require more than coordinating separate audits—they demand a proactive, risk-based strategy that integrates component work into a cohesive group opinion. With strengthened expectations around communication, access, supervision, and consolidation testing, principal auditors must orchestrate roles, responsibilities, and documentation across global teams. This article explores practical strategies to scope effectively, manage instruction flows, overcome access limitations, and avoid common failure points. From consolidation walkthroughs to aggregation risk control, successful execution hinges on early planning, robust two-way communications, and disciplined quality management aligned with the latest auditing standards in Hong Kong and internationally.
What kind of companies in Hong Kong need to have annual audit?
In Hong Kong, nearly all locally incorporated companies must undergo annual statutory audits, regardless of profit or IRD tax return requests. This applies to both private companies limited by shares and companies limited by guarantee. Common misconceptions—such as audits being unnecessary for small or inactive businesses—can lead to legal penalties. Only officially dormant companies that meet strict conditions are exempt. This explainer outlines the legal basis under the Companies Ordinance (Cap. 622), clarifies who must be audited, addresses misunderstandings, and details the directors’ responsibilities and penalties for non-compliance.